AWE Group’s shares jumped more than 20 per cent after the oil and gas group receives a $430 million takeover bid from a Chinese state-owned energy corporation.

November 30, 2017

Shares in oil and gas group AWE have jumped more than 20 per cent following a $430 million takeover bid from a Chinese state-owned energy corporation.

AWE on Thursday said its board was considering China Energy Reserve and Chemical Group’s 71 cents a share offer but believes it is not high enough to give CERCG access to its books under due diligence.

The offer is well above AWE’s Wednesday closing price of 54.4 cents and AWE shares closed 12.5 cents higher at 67 cents on Thursday.

RBC Capital Markets analyst Ben Wilson said the offer appears to be focused on the company’s most valuable asset, Waitsia gas field in the Perth basin.

Sydney-based AWE says the field is the largest onshore gas discovery in Australia for 40 years and has the capability to supply approximately ten per cent of Western Australia’s domestic market needs.

The company said while it had appointed financial and legal advisers, there is no guarantee the offer will result in a deal.

Mr Wilson agrees the offer may not be high enough following AWE’s recent progress with the Waitsia field and shareholders’ enthusiasm for the project. 

“While any bid from a company associated with Chinese National Petroleum Company must be taken seriously, we think bid pricing needs to be higher to engage the board and major shareholders,” Mr Wilson said.

The Foreign Investment Review Board may also have something to say about the deal given the emerging status of Waitsia as an important strategic asset within the domestic gas market, according to Mr Wilson.

AWE also has interests in producing assets, the BassGas and Casino projects, off Victoria and 50 per cent of the Santos-run Ande Ande Lumut oilfield in Indonesia.

Beijing-headquartered CERCG is involved in oil and gas exploration, development, storage and distribution, although the company recently entered the property market, buying a 55 per cent stake in Hong Kong’s tallest building for $US5.15 billion.